Wednesday, June 20, 2018
Business

PolitiFAct: With Kasich, Ohio grew out of $8 billion 'deficit'

The statement

When John Kasich became governor of Ohio, "there was an $8 billion budget deficit, and now there's a $2 billion surplus."

Arnold Schwarzenegger, March 6, in an endorsement speech in Columbus, Ohio

The ruling

Kasich has made similar statements throughout his campaign for president and highlighted this fiscal transformation on his website.

"I took the state of Ohio from an $8 billion hole … to a $2 billion surplus," Kasich said during the Republican presidential debate in Cleveland last year.

It's very similar to Schwarzenegger's claim.

An $8 billion hole?

There's an argument for $8 billion, but there's also an argument for something closer to $6 billion, according to a deep dive by the Cleveland Plain Dealer in 2011.

The $8 billion figure is rounded up from a $7.7 billion gap between spending and expected revenues. It was an initial estimate from January 2011, based on the assumption made several months earlier that there would be no new revenue growth. However, revenues did grow as the economy rebounded that year, reducing the gap to between $5.9 billion to $6.1 billion — a calculation that Kasich's budget director, Tim Keen, agreed with "conceptually" in a 2011 interview, though he took issue with some of the methodological details.

Whatever the number, Kasich avoided a potential misstep when he spoke of this as a "hole" rather than a deficit. Ohio, like most states, cannot run an actual budget deficit. The $8 billion gap is more accurately described as a projected shortfall rather than a deficit. Schwarzenegger used the term "deficit," which we interpreted as a minor misstatement rather than an attempt to deceive.

A $2 billion surplus?

This figure is clearer. Ohio's Office of Budget and Management reported in July that the state's "rainy day fund" had a little more than $2 billion in it, up from effectively zero when Kasich took office in 2011. The surplus remained above $2 billion last week, said a spokesman for the budget office.

Does Kasich deserve credit?

It's not unreasonable to give Kasich some credit for the state's improving economic fortunes — he is a governor, after all, and he forged the state's fiscal policy in concert with the Legislature. Schwarzenegger's claim strongly implies Kasich played a central role in the turnaround, though it doesn't explicitly link the two together.

But it's important to remember that Kasich took office at the very start of the national economic recovery, and as the national economy has improved, so has Ohio's. When Kasich was inaugurated in January 2011, the unemployment rate in Ohio was 9.2 percent — exactly the same as the national rate. As of December, the national unemployment rate was 5 percent and the rate in Ohio was 4.8 percent. So Kasich's timing has been fortunate.

The statements are accurate but need additional information, so we rate them Mostly True.

Edited for print. Read the full version at PolitiFact.com.

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